Embedded finance is changing how financial services appear inside the products people already use. Instead of sending customers to a bank or external checkout, embedded financial services let them pay, borrow, insure, or store funds directly inside the platforms they trust. This user experience feels faster, clearer, and more aligned with customers’ high expectations.

Below, we’ll discuss the benefits of embedded finance for Australian businesses, how it works, and how companies can adopt it to improve conversion, strengthen loyalty, and open new revenue streams.

What’s in this article?

• What is embedded finance for Australian businesses?
  
• Why is embedded finance useful for Australian businesses?
  
• How does embedded finance work within digital platforms?
  
• What challenges can arise with embedded financial products?
  
• How can Australian businesses decide if embedded finance is right for them?
  
• What are the best practices for embedded finance solutions?
  
• How Stripe Capital can help
  

What is embedded finance for Australian businesses?

Embedded finance is adding financial services to a nonfinancial product instead of redirecting users to a bank website or third-party app. The category covers a wide range of functions: payments, lending, insurance, investment features, and even account-like capabilities powered by banking-as-a-service partners.

Almost any online business can now plug financial capabilities directly into its platform through modern application programming interfaces (APIs). That’s how a retail site can offer installment plans at checkout or a ride-sharing platform can let customers store a balance and pay within the app. As a result, a financing decision that once took days can happen in seconds because the partner runs the credit check in the background. The user stays in the flow, finishes what they came to do, and moves on.

Why is embedded finance useful for Australian businesses?

When a platform or provider lets people pay, borrow, or insure within the product, everything moves faster.

Here’s why embedded finance is so appealing.

A growing market backed by real demand

Companies that add payments, lending, or other financial features to their products usually gain new revenue streams through transaction fees or shared economics. The embedded finance industry in Australia is forecasted to reach 11.77 billion US dollars (USD) in revenue by 2029.

Stronger loyalty and higher customer value

Embedded payments can help reduce checkout abandonment, financing options can increase average order value, and features such as in-app wallets can extend how long customers stay within a company’s system. Many businesses experience a drop in churn after adopting embedded finance options because the overall experience becomes easier for the customer.

Closing Australia’s small business funding gap

A persistent financing gap for small and medium-sized enterprises in Australia creates an opportunity for embedded credit. Traditional lenders often decline small business applications, which leaves companies searching for alternatives. When financing is offered directly inside marketplaces, commerce platforms, or business tools, it can reach people at the moment they need it.

An improvement-friendly regulatory environment

Australia’s regulations and payment networks make embedded finance easier to build responsibly. The Consumer Data Right enables secure, permissioned data sharing for more accurate decision-making and personalized offers. Meanwhile, the New Payments Platform supports instant account-to-account payments.

How does embedded finance work within digital platforms?

The platform brings users and context, while the financial partner handles compliance, risk models, and transaction processing. The result is a blended experience that feels simple to the user.

These are the components that make embedded finance work.

APIs to make connections

Modern fintech APIs let platforms plug in features such as payments, lending, insurance, and account-like capabilities to a product without having to build them from scratch. When a customer checks out with an installment plan or stores funds in an in-app wallet, the platform is sending real-time data (e.g., purchase amount, user info, risk signals) to the financial partner. The partner processes everything and returns an approval or confirmation in seconds.

Licensed partners for regulated functions

Businesses that embed finance into their products usually partner with providers that already hold the required licenses to handle underwriting, Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, and other behind-the-scenes responsibilities. The business controls the user experience and relationship, while the partner operates the financial infrastructure safely and compliantly.

Unified frontend user experience

The whole point of embedded finance is that customers don’t have to leave the platform midflow. Loan offers, payouts, insurance add-ons, stored balances, and payment confirmations all show up inside the same interface, styled to match the platform’s design. Disclosures or consent screens still appear where required, but they’re integrated into the design so the experience feels cohesive.

Real-time data and decisions

Because data moves nearly instantly between the platform and its financial partner, everything from credit checks to identity verification happens in the background. Australia’s real-time payments infrastructure makes fast money movement possible, and open banking allows financial partners (with permission) to evaluate a user’s financial position without manual uploads or delays.

What challenges can arise with embedded financial products?

Embedded finance introduces technical, regulatory, and reputational stakes that businesses need to manage.

Here’s what to watch for:

• Technical integration load: Embedding payments, lending, insurance, or wallets often means reworking backend systems. These integrations also require ongoing upkeep as partners update their systems or regulatory requirements change.

• Increased customer support: Customer service is usually the first stop for questions about issues the financial partner technically owns. Teams across product, support, legal, and finance need training, shared workflows, and clear escalation paths.

• Serious compliance responsibilities: Even with a licensed partner handling regulated activity, the platform must still meet standards regarding identity checks, AML controls, data use, disclosures, and responsible marketing.

• Exposure to financial risk: Lending or stored-value features introduce credit, fraud, and reputational risk. When something goes wrong, customers can associate the pain with the platform, not the partner.

• Up-front cost and time investment: Integrating financial tools requires development time, and revenue gains often build gradually rather than immediately. Many businesses reduce risk by launching pilots with a small segment before committing fully.

• Ongoing partnership management: Road map changes, risk model updates, and new features on the partner side could require updates on the platform side, which adds a continuous coordination component to operations.

How can Australian businesses decide if embedded finance is right for them?

Choosing to embed financial services is ultimately a strategic call.

Consider the following factors:

• Clarity on customer needs: Embedded finance generally works well when it directly solves something customers struggle with, such as checkout abandonment, cash flow gaps, or insurance decisions that slow down a purchase.

• Fueling business strategy: The financial tool should strengthen your core model by, for example, increasing revenue, improving retention, expanding average order value, or deepening engagement.

• Strength of partner options in your category: If you can find a provider with strong APIs, reliable compliance frameworks, and experience in your industry, the path forward becomes far more viable.

• A realistic cost-benefit view: Integration, compliance, and support each carry costs, and adoption could rise slowly before revenue catches up. Pilots or limited rollouts can help validate demand before you invest heavily.

• Organizational readiness to execute: Embedded finance touches engineering, design, legal, support, and finance. If these teams have the capacity to collaborate, the integration will be easier to build and roll out.

What are the best practices for embedded finance solutions?

The organizations that get a lot of value from embedded finance are the ones that treat it as an ongoing undertaking.

Consider the following best practices.

Make the financial experience feel native to your product

Embedded finance should blend into the workflow your customers already know. Clear explanations, thoughtful placement, and straightforward verification steps make the financial element feel like a natural part of the experience rather than a detour.

Incorporate security into every decision

Users are handing over financial information inside your platform so protections such as secure data flows, transparent terms, and predictable payout or settlement behavior become part of your brand promise. Strengthen these foundations early to avoid undermining confidence later.

Use real-time data to improve

Transaction patterns, engagement metrics, and customer feedback can show where the financial feature is helping and where it’s getting in the way. Open banking data (with permission) adds another layer of insight that can sharpen underwriting, encourage adaptation, and customize offers to customer needs.

Roll out at a pace your organization can support

Controlled pilots, limited releases, or segmented availability let you validate the experience under real conditions without overwhelming teams. This approach creates space to refine processes, support workflows, and achieve technical stability before wide adoption.

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